This week’s questions from Bruce
What’s the percentage of people who are on Medicare Advantage plans for over a year who later apply to change to Original Medicare and a Supplement are actually successful? Reading your columns has educated me on the subject and I concluded this change is almost impossible. A friend of mine went on an Advantage Plan about a year ago. I told her after 12 months, it’s very hard to go back to original Medicare and a Supplement because the insurance companies can now use pre-existing medical problems as a reason to deny acceptance. She went back to the agent who sold her the policy and he stated she could apply to go back to Original Medicare any time and not to worry. Do you agree with that assessment?
Answer
Supplements vs Advantage Plans
Before I get into the heart of the column, I want to be clear there are the major differences between Supplements and Advantage Plans as far as cost, access to doctors and hospitals, how claims are approved and paid, the amount of medical bills one is exposed, and what ancillary benefits are provided. It’s vital those are well understood, as well as the pros and cons of both types of plans before making an initial choice.
Let me also explain underwriting. It’s the process in which Medicare Supplement companies review health and medical claims history to determine whether or not they want to take on the risk of insuring an applicant. It includes a series of medical questions as well as a review of one’s Medical Information Bureau (MIB), which shows a history of all medical and prescription claims paid by insurance companies.
Anyone who’s within six months of their Part B effective date DOES NOT need to go through underwriting. It’s a federal regulation that during this time, known as the Initial Election Period (IEP), all Supplement companies must accept anyone who applies into any letter plan they offer for purchase. Bruce mentions a 12-month period where underwriting is waived. It indeed exists, but with some fine print. It applies only to those who initially enrolled in an Advantage Plan HMO or PPO when their Part A went into effect. Almost everyone who postponed enrolling in Part B when first turning 65 could not use this exception. In addition, you can only move from an Advantage Plan to a Supplement during AEP or OEP. If one’s 12 months were up between April through September, going to Original Medicare plus a Supplement would only be possible starting October 15th, at which time underwriting would then be required.
Check With Us First
As far as my assessment on what the agent told Bruce’s wife’s friend; Only part of what he said is correct. Anyone can leave an Advantage Plan and go back to Original Medicare A and B, but not at any time. That can only occur during either AEP or OEP. And if he told her not to worry in context that going back to a Supplement would be easy, shame on him. He absolutely shouldn’t have made that statement. Medical underwriting is required for almost everyone who is six months past their Part B effective date. I don’t care if someone is the healthiest 65-year-old on the planet. I can’t even begin count how many Medicare clients have stopped me at a restaurant or grocery store to thank me for recommending they consider a Supplement despite their excellent health at the time they first went on Part B. But since, as they went on to explain, they had been through procedure after procedure, test after test, and multiple hospitalizations and never received a bill. Most told me they didn’t know where they would be without their coverage and almost all wouldn’t have been able to enroll in a Supplement after they became sick.
When our agents meet someone who’s in or approaching their IEP, we mention over and over during our consultations the possibility that enrollment in an Advantage Plan may make a future move to a Supplement impossible or unaffordable for those with certain preexisting conditions. And in my opinion, it’s one of the biggest, if not the biggest risk, of choosing an Advantage Plan. However, because they have become such an excellent value in recent years with the combination of low premiums and very generous ancillary benefits like dental, vision, hearing, OTC allowances, etc., more and more people are willing to take that risk, which is completely understandable.
As far as the percentage of people who can pass underwriting? It’s not impossible for everyone because treatment for cholesterol, blood pressure, as well as many other common conditions are not considered. However, I estimate only approximately 15% of people we consult who already have Advantage Plans and would like to move to a Supplement can get approved. I attribute the low number to people who reach out shortly after they’ve received bills in the thousands of dollars, which means they just went through a serious medical issue(s). We’ve had countless people we don’t even submit because they have a condition that would result in an automatic denial such as A-fib, spinal stenosis, insulin dependent diabetes, certain cancers, auto immune disorders, among a few others.
However, please don’t think because you’ve had cancer, a heart attack, placement of a stent, or other issues two or three years ago, you’re not a candidate for a Supplement or will be denied. Check with us first before you make that assumption. We generally write all our Supplement clients with four companies, and they all have different underwriting criteria. After going over the medical questions and determining approval is likely, 95% of people we submit for underwriting are accepted.
Thank you!
If you have any questions or concerns regarding this column topic, or would like to make an appointment for a no-cost consultation, please feel free to give us a call – we would be happy to help. I’d like to remind everyone that I do a live call-in talk show called Medicare A to Z every 1st and 3rd Monday of the month on WMBS Uniontown, 590AM and 101.1FM, from 1 to 3 PM. You can listen in on their website, wmbs590.com.
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